Capital One is an Amazon Web Services client, but the bank says it had few problems on Tuesday when thousands of other users of the cloud computing services experienced major disruptions to their websites and apps.
Amazon Web Services reported Tuesday high error rates with its service that companies use to manage web applications, house data and host software. Essentially, thousands of sites and apps rely on AWS and were not working or were rather slow that day.
But Capital One, which has fashioned itself as a bit of an evangelist for banks to embrace cloud computing, said its method of spreading its use of AWS across various regions was the key to its continuity.
The consent order between the Federal Reserve and Capital One required the bank to submit progress reports on its efforts to improve its risk management functions.
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“We experienced minor impacts that were quickly resolved due to resiliency we have in place across AWS regions,” a spokeswoman said in an email.
The AWS outage is a good reminder to banks that although cloud computing has considerable draws — better security and performance, for instance — it has the same disadvantage that so many bank systems have: the vulnerability of a relying on provider, said David Albertazzi, an analyst at Aite Group.
“Today’s event could potentially shake some financial institutions’ confidence in the public cloud as they’re contemplating what to put out there,” Albertazzi said in a statement. “They need to be selective in choosing which solutions they put on the public cloud versus private cloud. They also need to match requirements and inherent risks with the characteristics of each service and deployment models.”
The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
